Higgins
| Jurisdiction | UK Non-devolved |
| Judgment Date | 29 August 2018 |
| Neutral Citation | [2018] UKFTT 523 (TC) |
| Date | 29 August 2018 |
| Court | First Tier Tribunal (Tax Chamber) |
[2018] UKFTT 0523 (TC)
Judge Anne Scott
Income tax – Penalty for failure to make returns timeously – TMA 1970, s. 8 – Return not issued to establish chargeability – Notice to file not valid – No obligation to file – Penalties not properly imposed – Appeal allowed.
The First-tier Tribunal (“FTT”) allowed an appeal against penalties issued by HMRC under FA 2009, Sch. 55 for late filing of a 2015/16 tax return. The FTT held that no valid s. 8 notice had been given and therefore there was no obligation to file with which to comply.
The Appellant (Ms Higgins) is a teacher and had always paid tax on her employment income through Pay As You Earn (PAYE). HMRC issued a P800 tax calculation which concluded that she had underpaid tax in the sum of £100.20 because of a failure to deduct a sum of Jobseekers Allowance that had been received. HMRC requested voluntary payment of this sum. As the Appellant did not make contact, HMRC unilaterally decided to collect the sum via self-assessment. On 21 April 2018, a paper tax return was issued by HMRC but the Appellant claimed that she did not receive it. The Appellant also claimed to have contacted HMRC to ask why the amount could not be collected via PAYE and to have been told that that small underpayments would be collected through PAYE.
As there was no tax return submitted by the given deadline, HMRC issued a £100 late filing penalty, £900 in daily penalties and a 6-month late filing penalty of £300. In their Statement of Case, HMRC conceded the daily penalties so the FTT had to consider the validity of the late filing penalty and the 6-month penalty only.
The Appellant relied on Lennon ([2018] TC 06453) and other cases in support of her argument that the s. 8 notice issued was not issued for a statutory purpose.
The FTT noted that s. 8 TMA 1970 expressly required a notice to file to be given for “the purpose of establishing the amounts in which a person is chargeable to income tax” in any given tax year. That being the case and since HMRC knew precisely the amount of tax that had been underpaid namely £100.20, it could not be said that they had issued a s. 8 notice for its given purpose. The FTT agreed and adopted Judge Popplewell's analysis of the relevant law in Lennon and Groves (Groves [2018] TC 06541). The FTT agreed that an appellant may challenge the validity of a s. 8 notice during penalty proceedings and that such notice may only be valid if issued for the purpose stipulated in the section.
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